BHMH2112 CRM_Ch09.pptx

BHMH2112 Customer Relationship Management Chapter 9 Successful CRM Copyright © 2023 CPCE Dr Carmen Sum. All rights 1  9.1 Chapter Objectives Describe the features and...

BHMH2112 Customer Relationship Management Chapter 9 Successful CRM Copyright © 2023 CPCE Dr Carmen Sum. All rights 1  9.1 Chapter Objectives Describe the features and outcomes of successful CRM. Explain the facts about loyalty Recognise the outcomes of customer loyalty. Design loyalty programmes. Explicate the integrated effect of loyalty Copyright © 2023 CPCE Drand Carmen Sum. All rights 2  9.2 Successful CRM - Profitability Profitability is the ultimate outcome of CRM, which is driven by improved sales growth and revenue and improved customer loyalty. Copyright © 2023 CPCE Dr Carmen Sum. All rights 3  9.2 Successful CRM – Intimate Relationships The relationship between a customer and a brand is close, positive and two-sided and both partners respect and are committed to the relationship. The relationship can protect the brand from any action taken by the competition. The relationship can lead to long-term competitive advantage, which is difficult to be imitated. The relationship can prevent customers from succumbing to the temptation offered by the competition. The relationship has a positive effect on profitability. Copyright © 2023 CPCE Dr Carmen Sum. All rights 4  9.2 Successful CRM - Loyalty Loyalty is a deeply held commitment to re-buy or re-patronize (visit again) a shop in the future despite situational influences (e.g., bad news about the product or brand) and marketing efforts (i.e., marketing mix activities) having the potential to cause switching behaviour. Copyright © 2023 CPCE Dr Carmen Sum. All rights 5  9.3 The Facts about Loyalty 1. Attracting new customers cost 5 times more than keeping current customers. Need $5 to recruit a new customer Need $1 to keep a current customer 2. On average, a company loses 10% of its customers each year. 90% existing customers kept in 10% left relationship Copyright © 2023 CPCE Dr Carmen Sum. All rights 6  9.3 The Facts about Loyalty 3. A 5% reduction in customer defection rate can increase profits by 35% to 95% depending on industry. - 5% Customer Defection Rate  +35% to +95% Profits 100% 95% 90% 90% 85% 85% 84% 81% 80% 75% 70% 60% 50% 50% 45% 45% 40% 40% 35% 30% 20% 10% 0% y e ts e t e c c ng si c ce rd ag e dr y n en ar en an hi o an r vi Ca r n u tio w r s r m ft g u li ep u Se it ke au rib e A ns b D ns ed ro lL st ag So in g I Pu nk I t o r B a i n ife e Au C l ri lD a r tis L Ba om tr ia st ia M u r g ve ch H s d t in Ad to / du In us ild an In d Br Au In B u ce ffi O Copyright © 2023 CPCE Dr Carmen Sum. All rights 7  9.3 The Facts about Loyalty 4. Profit rate 120 increases over 100 the life of retained 80 customers 60 because of increased 40 purchases, 20 referrals, price premiums and 0 1 reduced -20 operating Cost Base Profit costs. Profit from Increased Purchases Profit from Referrals Profit from Reduced Operating Costs Profit from Price Premium Copyright © 2023 CPCE Dr Carmen Sum. All rights 8  9.4 Outcomes of Loyalty Customer loyalty could be classified into three types: Behaviour Attitudina Cognitive Customer al l Loyalty Loyalty Loyalty Loyalty Behavioural Attitudinal Cognitive Loyalty Loyalty Loyalty Copyright © 2023 CPCE Dr Carmen Sum. All rights 9  9.4 Outcomes of Loyalty Outcomes of Loyalty Behavioural Attitudinal Cognitive Loyalty Loyalty Loyalty Repurchase Relative Willingness to Intentions Attitude Pay More Switching Willingness to Exclusive Intentions Recommend Consideration Exclusive Altruism Identification Intentions Copyright © 2023 CPCE Dr Carmen Sum. All rights 10  9.4 Outcomes of Loyalty Behavioural loyalty covers Behavioural Loyalty the retention behaviours of customers. Customers with stronger behavioural Repurchase Intentions loyalty would: 1. Have greater repurchase intentions from the same provider Switching Intentions 2. Have lower switching intentions to other providers 3. Make all purchases in a Exclusive Intentions particular category from a single provider Copyright © 2023 CPCE Dr Carmen Sum. All rights 11  9.4 Outcomes of Loyalty Attitudinal loyalty is an Attitudinal Loyalty emotional-based assessment of a brand. Customers have strong attitudinal loyalty would Relative Attitude 1. Have a greater relative attitude to the brand, i.e. a greater preference to the brand and a stronger sense of Willingness to Recommend affiliation with the brand 2. Have greater willingness to recommend the brand to the others Altruism 3. Demonstrate altruistic behaviour, i.e. help the brand or other customers for better delivery of the products Copyright © 2023 CPCE Dr Carmen Sum. All rights 12  9.4 Outcomes of Loyalty Cognitive loyalty is a conscious Cognitive Loyalty assessment of a brand or the advantages and incentives of repurchasing. Customers have greater cognitive loyalty would: Willingness to Pay More 1. Have less sensitivity towards price fluctuation and a greater willingness to pay more for the brand’s products 2. Consider the brand exclusively for a Exclusive Consideration particular product/service that the brand is the first preference in the customers’ mind 3. Identify the brand as an extension of Identification one’s self and accept this by using terms such as “my service provider”, “us”, and “we” Copyright © 2023 CPCE Dr Carmen Sum. All rights 13  Table 9-1 Game Corner Types of loyalty Case outcomes and details George loves KING SKINCARE a lot. He likes this brand much more than other skincare brands. George is a super fan of KING SKINCARE. He always provides support for its customers or consumers on purchasing and using its products in FB and IG community groups. George is using the products of KING SKINCARE. He intends to buy again in the future. George keeps purchasing the products of KING SKINCARE no matter how much it charges. Copyright © 2023 CPCE Dr Carmen Sum. All rights 14  Table 9-1 Game Corner Types of loyalty Case outcomes and details George keeps talking about the benefits and features of KING SKINCARE products to his friends as “My skincare brand, KING, is super good”. George likes KING SKINCARE. He keeps introducing this brand, its features, and its products to his friends, peers, and colleagues without hesitation. George is using the products of KING SKINCARE, but he finds that the products do not fit his skincare condition. He will change to another brand, “EX Skincare” starting from the next purchase. George considers KING SKINCARE as the Copyright © 2023 CPCE Dr Carmen Sum. All rights 15  Table 9-2 Game Corner Instruction: Evaluate the loyalty outcomes for the following situation Candace is a loyal customer to BB Coffee Shop with a favourable attitude. She loves BB Coffee Shop more than other brands and shops. She has recommended this shop to her best friends, Amy and Ben. She is very willing to recommend this shop to other friends and colleagues. She always introduces its new drinks and cakes to them on behalf of BB Coffee Shop. The products of BB Coffee Shop are a bit expensive than other brands and shops, but Candace doesn’t care about that. She only considers BB Coffee Shop as the only one option for her coffee consumption, as she likes the taste a lot. She couldn’t find other brands or shops offering coffee drinks with the same good taste. She always says to her friends, “My coffee brand is good! Have a try!”. Candace keeps repurchasing coffee and cakes from the only one shop for years. She recently had a dissatisfactory shopping experience at the shop, and she tried to consume at other coffee shops. She was introduced JC Café by her colleague, Bobo, and she enjoyed its coffee drinks. Behavioura Attitudinal Cognitive = = = l Loyalty Loyalty Loyalty Repurchase Relative Willingness Intentions = Attitude = to Pay More = Willingness Exclusive Switching Intentions = to = Consideratio = recommend n Exclusive Intentions = Altruism = Identification = Copyright © 2023 Options: CPCE strong, Drmedium, low, Carmen Sum. weak,Allincreasing, rights depreciating, absent, etc. 16  9.5 Types of Loyalty Programme Watson’s Crystal Jade Explanation: Offer loyalty punches for product purchases. Example: - Watsons - Crystal Jade Restaurant Punch Programme Copyright © 2023 CPCE Dr Carmen Sum. All rights 17  9.5 Types of Loyalty Programme Explanation: Sell gift cards and the value may be redeemed in any stores a customer makes a purchase. Example: Klook Gift Card Gift Programme Copyright © 2023 CPCE Dr Carmen Sum. All rights 18  9.5 Types of Loyalty Programme Explanation: Membership is open to everyone who purchases a product or service. Example: LANEIGE Skincare - Any purchase (option 1) - At least $800 Open Club Membership (option 2) Programme - At least $1200 (option 3) Copyright © 2023 CPCE Dr Carmen Sum. All rights 19  9.5 Types of Loyalty Programme Explanation: A one-time (or annual) fee is charged to customers to enjoy benefits under certain membership conditions. Example: Outback Prestige Club Upfront-fees membership - one-time fee $488 Programme Copyright © 2023 CPCE Dr Carmen Sum. All rights 20  9.5 Types of Loyalty Programme Explanation: Segment customers based on the level of customer engagement. Loyalty tiers may be customised. Example: Cathay Pacific Marco Polo Club - Green Tiered Programme - Silver - Gold - Diamond Copyright © 2023 CPCE Dr Carmen Sum. All rights 21  9.5 Types of Loyalty Programme Explanation: Award loyalty points for any type of engagement, monetary or non- monetary. Each engagement may be worth a variable number of loyalty points. Example: Points Programme KIDZ Education - Points redemption https://www.kidz.co m.hk/blogs/sign-up/t agged/redeem 22 Copyright © 2023 CPCE Dr Carmen Sum. All rights  9.5 Types of Loyalty Programme Explanation: Partner with other companies to provide all-inclusive offers. Example: MoneyBack’s members could enjoy privileges offered by other brands, e.g. Zalora, Coalition Programme eatigo, XTC Gelato, and Generali x bolttech Copyright © 2023 CPCE Dr Carmen Sum. All rights 23  Loyalty Programmes Involved: 1. Tiered Programme 2. Points Programme 3. Open club Membership Copyright © 2023 CPCE Dr Carmen Sum. All rights 24  Table 9-3 Game Corner Loyalty Cases Programme(s) Gong-cha issued a sticker collection card for any customers who bought a drink costs $15 or more. Cardholders can redeem a free drink after collected 10 stickers. Apple Inc. offers iTunes GiftCard for customers to buy and send to friends as a gift to redeem products or services in the iTunes Store, App Store and Mac App Store. Any customers who have spent HK$300 (with purchase condition) can become Mega Club members of Mega Box Shopping Mall. Toysrus cooperates with different brands including Bossini, Sky100, Intercontinental hotels, KFC, and Saint Honore Cake Shop to offer special discounts to its Star Card Member. The VIP Club of Spaghetti House can be joined by paying $450. VIP members will then receive cash coupons, free dish coupons, discount offers and other year-round Copyright special © 2023 CPCE offers. Dr Carmen Sum. All rights 25  Table 9-3 Game Corner Cases Loyalty Programme(s) Customers of L’OCCITANE HK can become its VIP upon a net purchase of HK$1000. They can collect 1 bonus point for each HK$100 spent in the purchase and then redeem Gift Certificates at different amounts. Wai Yuen Tong Membership Programme has three types of membership: VIP, Platinum, and Titanium. For net purchase of $1500 in a single receipt, customers can join as VIP member. For net purchase of $5000 in a single receipt or a cumulative of $10000 within 3 months, customers can join as a Platinum member. For those who have cumulated $50000 within 3 months, they can join as Titanium member. All members can gain 1 bonus point for every net purchase of $100. They can also enjoy an exclusive discount, super Thursday privilege, birthday rewards, professional services, and so on. City’super has a membership system differentiating its customers. Every customer can become a super e-card member by spending a cumulative of $600 in its stores. Customers can earn 1 point for every $1 spent. If super e- card members accumulate 30000 points or above within 12 months, then he or she can become super e-gold card 26 Copyright © 2023 CPCE Dr Carmen Sum. All rights  9.6 Integrated Effect of Loyalty and Satisfaction on Customer Behaviours Depending on the magnitude of loyalty and intensity of satisfaction, customers usually behave in one of the following four basic ways: Consume r Mercenar Loyalist Defector Hostage behaviou y r Labels: Satisfacti High Low / High Low / on: Medium Medium Low / Low / Loyalty: High Medium Medium High Coming & Leaving/ Going & Unable to Behaviou Staying & Left & Low Switch & rs: Supportive Unhappy Commitme Trapped nt Marketers have to take marketing or CRM strategies to manage all four types of behaviours. Copyright © 2023 CPCE Dr Carmen Sum. All rights 27  Table 9-4 Game Corner Cases Labels Eddie had an unsatisfactory shopping experience at Happy Food Supermarket. He had stopped purchasing products since this experience. Mandy feels satisfied with the products of QQ-BB Skincare, but she wants to try a new brand from Korea, “K-Skincare”. Peter always consumes Food Lion Delivery services and feels happy with its services. He intends to use it again in the future. Anna doesn’t like the products and services of BBQ Restaurant but she paid $500 to join its one-year membership programme. She will keep consuming from it to avoid any 28 loss. Copyright © 2023 CPCE Dr Carmen Sum. All rights